What do you think about the cost of housing in San Diego?
In previous blog posts, I have shared the rising cost of housing in the San Diego region. Since the Great Recession, home values and rental rates have increased dramatically, impacting affordability. In November, I concluded in my review that a primary reason for the surge in home values and rents was the supply of new units was not keeping up with demand. Underlying reasons for the lack of new construction included availability of land or really the lack thereof, the high cost of materials and the cost and amount of time to navigate the permit process. With many publications showing the cost of housing in San Diego remaining between 40%-50% of net income for many households, it doesn’t appear we have made much progress in leveling out housing expenses. Forbes suggests that your mortgage should not exceed 28% of your monthly income to live comfortably.
In addition to the issues listed above, a new factor has emerged to slow the pace of construction. According to the National Association of Home Builders/Wells Fargo Housing Market Index report for January 2018, the most serious problem facing the construction industry is lack of qualified labor. The US Department of Labor Statistics seems to substantiate this problem. While the economy has improved significantly since January 2008, the Labor Department reports in their March 2018 report that there are fewer people employed in the construction industry today than were employed in this sector in January 2008. During the recession, construction personnel changed professions. In addition, young people decided their future was in college and not in the construction trades. Contractors and subcontractors cannot find enough skilled personnel to fill their job openings.
This new phenomenon is causing issues nationwide. In a January 18, 2018 article, Zillow writer Aaron Terrazas proclaimed that the housing market was experiencing an inventory crisis. He stated that as of December 2017, the national housing market had gone 35 consecutive months of falling year-over-year inventory. In the March 18, 2018 Wall Street Journal, the headline declared “The Next Housing Crisis: A Historic Shortage of New Homes.” In a January 2018 publication, another Zillow staff writer identified 15 cities nationwide that are near a housing crisis. San Diego was #8 on the list. Over the last 12-months homes in San Diego have appreciated 7.1% to an average of $565,000 due in large part to the 20.2% decline in the inventory of homes available for sale. It should come as no surprise that the US Census Bureau reported San Diego County had a net migration loss of nearly 16,000 people for the year ending July 2017 as many people moved to other states for more affordable housing.
For many San Diegans, moving out of California is not an option—and that’s where Mission Fed can help! It is time to move, but not out of the state. Contact or visit your nearest Mission Federal Credit Union branch to discuss your financial situation and housing goals. Your success is our bottom line—and that includes homeownership even in a tough housing market.
Plus, whether you’re in need of the right credit union Car Loan, Credit Card, Home Loan, financial workshops or financial guidance, we can help you. San Diego is our home, too, and we’re here to help you meet your goals, or as we call them, Mission Fed Moments.
The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article by Mission Federal Credit Union is for the information and convenience of its readers and does not constitute endorsement, control or warranty by Mission Federal Credit Union.
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